This article is about why Europe is in a very favourable position when it comes to assessing the global changes that are taking place at rapid speed these years. Often when we develop scenarios for the future we have a tendency to look at primarily economic factors as drivers for change.
Of course, if you are an economist you will most likely assume economic factors drive everything else, if you are a scientist you assume science is driving everything else and so on. The truth is possibly that is a complex combination of hundreds maybe thousands of factors.
In this article I will address some of the non-economic factors that nevertheless have a huge influence when we assess the potential winners and losers in a globalised world.
The power base is no longer a base but a distributed power
Not many decades ago the global economy was dominated by Europe, Japan and USA. Since the economic and international political power was so centralised there was no need for trying to understand the cultures of all the other regions around the world.
Technological developments like the internet, cheaper air-travel, global electronic infrastructure, etc., together with de-regulation and international trade agreement laid the foundation for the rise of emerging- and frontier markets.
With a distributed economic, political, technological power the rules of the game is changing. When you gain economic, political and technological power you also want your cultural values to be respected and promoted.
In the European colonial period (from the 15th century to 1914) the Europeans could dictate the trade conditions globally and there was plenty of military power to reinforce the conditions if necessary. Spain, Portugal, Britain, France, the Netherlands, Germany and several smaller European countries established colonies outside Europe in that period but it effectively ended from 1945-1975 when nearly all colonies became independent. The ties have however remained strong and many of these new independent countries copied the legal system from the country they were colonised by.
USA saw a tremendous growth after World War II and in 1960 the GDP of USA made up 40% of the global GDP which has lead some Americans to self-proclaim their country as the leader of the free world. Today the GDP of USA has dropped to less than 20% according to World Development Indicators.
That I think is very good news — maybe not for USA but for the rest of the world it is. Most of the conflicts we have witnessed since World War II have been rooted in cultural conflicts and economic inequality. The rise of the emerging- and frontier markets is a step in the right direction when it comes to economic balance.
Cultural Intelligence – the most important skill to possess in global business
With an increased economical, social and cultural equality negotiations and deals have to be conducted in a different way than when one of the parties had the dominance in all areas. In that respect Europe is very well positioned because of its internal cultural diversity.
Europe is unique in many ways. One of them is the huge cultural diversity that exists within a fairly small geographical area. No matter where you are in Europe you can jump on a plane, fly 1 hour in any direction and you will meet people who do things like you in a completely different way in a foreign language. Being brought up and live in that level of diversity develops a high level of cultural intelligence.
A definition of cultural intelligence I particular like is “The ability to entertain a thought without accepting it”. That means that you can put yourself in other people’s shoes and understand why they act and think like they do without ever wanting to do the same thing.
Often when I do speeches and workshops on this topic I get the question, “Isn’t USA in the same position?”. No, they are not. USA consists of immigrants, but they have all bought into the same set of principles including the language. Europe is far more diversified.
To some people speed in the decision process is a sign of effectiveness. To others the ability to get everyone on board and reach good reconciled solutions is effectiveness. The decision process in Europe might be lengthy, but the results are usually worth waiting for.
There hasn’t been a war among the EU countries since the union was established in 1956. In fact it is the longest period in the continents history without a war. So forcing countries to negotiate and reach reconciled solutions works.
The high level of cultural intelligence among EU citizens is a phenomenal asset that inevitable will strengthen Europe’s position both politically and financially in a globalised, more equal environment.
Trump and Brexit are the best things that has happened to Europe in many years
Before the rise of emerging markets almost all financial transactions and international trade agreements involved USA and/or Europe. With the rise of emerging markets that started to change. The BRIC (Brazil, Russia, India and China) countries developed their own agreements and we have seen similar initiatives among the ASEAN countries. They have their own agenda and want to be respected as equal partners in international trade. The rise of Trump and trumpism in USA has made it even more clear – not only to the emerging- and frontier market, but also Europe, that it is urgently necessary to develop bi-lateral relations independently of USA.
With United Kingdom leaving the EU, EU can speed up the necessary reform process headed by Macron and Merkel. It is a process where not only economy is on the agenda but also environmental issues, social responsibility and sustainability – all core European values that appeals a lot to the younger generation in the emerging- and frontier markets.
Europe’s success with bringing so many cultures living relatively peacefully together is something that can be expanded further. When you combine that success with the holistic agenda EU has (Environment, sustainability and social responsibility) Europe is very well suited to succeed in a globalised world. Not through economic or military power, but through the ability to develop mutual beneficial solutions across cultures of all kinds.